I began analyzing the financial markets in 1982 when I became the research director for a financial advisory firm and provided regular market analysis on stocks, commodities, currencies and mutual funds. I am a technical analyst. Much of my focus was on how obscure technical indicators or methods, could be applied to the financial markets and used as an effective trading tool. Many of the indicators I have used for years, such as Gerry Appell's MACD and Welles Wilder's RSI, have subsequently gained wide popularity.

This page is devoted to sharing my insights and techniques in order to help you become a smarter trader/investor. Over the past twenty years I have traveled around the world several times, visiting all of the major financial centers as he taught professional traders and money managers my approach to the financial markets.

My method of stock selection starts with a proprietary scanning method to select a group of individual stocks for more extensive analysis. This includes an in-depth study of the volume patterns that I use to determine the strength of a stock's trend. Those with the strongest trend, either up or down, are then further analyzed to determine entry, exit and risk levels. I use Fibonacci retracement, projection and extension analysis to determine both profit objectives as well as stops.

Two High-Yield Healthcare Picks

The new closing high in the Dow Industrials on Friday was consistent with my view from last month’s 4 Dow Stocks Under Accumulation that money was flowing into the large-cap, high-yielding stocks.

Of course, the question is how long can this outperformance last? Many are still trying to accept the fact that the utilities have been the best-performing sector in 2014. As I discussed in my review of Barron’s big money poll, this sector was the least-favored last fall by this group and this did not change in the most recent poll.

In the 52 years ending in 2012, dividends made up more that 60% of the real stock market returns. The recently recommended Vanguard TotalTotal World Stock Index (VT) has a current yield of 2.32%, which compares well with 2.62%–the historically low yield of 10-year T-notes.

The healthcare sector has been a favorite since 2012 when it broke out of a ten-year trading range. The Select Sector SPDR Health Care (XLV) has been a long-term portfolio holding since the fall of 2012. These two drug stocks have attractive yields and appear to have completed their correction, so they should be considered for your portfolio.

Click to Enlarge

Chart Analysis: Select Sector SPDR Health Care (XLV) made its high of $60.28 on March 6 and dropped to a low of $55.39 on April 14. This was a decline of 8.1% from the highs.

The monthly projected pivot resistance is at $39.79, which is very close to the daily starc+ band.

The weekly starc+ band is at $41.11.

The daily relative performance moved above its WMA two weeks ago and has just broken its downtrend.

The daily OBV dropped below its WMA in early March but now appears to have bottomed.

The OBV shows a shallow uptrend, line l, and is above its WMA.

The weekly OBV (not shown) is now testing its WMA.

Click to Enlarge

Bristol Myers Squibb Co. (BMY) barely beat earnings when it reported at the end of April but missed on revenues. The stock made its low at $48.26 in reaction to its earnings and it has a current yield of 2.80%.

This completed a bottom formation, line d, suggesting BMY is becoming a market leader.

The OBV has formed higher low, line f, and needs to overcome its downtrend, line e, to complete its bottom formation.

The weekly OBV and RS lines (not shown) have turned up but are still below their WMAs.

There is initial support now in the $49.85-$50.44 and the 20-day EMA.

What It Means: Though both Abbott Laboratories (ABT) and Bristol Myers Squibb Co. (BMY) need another strong week to confirm a new uptrend, they look similar to Baxter International Inc. (BAX) that was recommended in early March. It is now up over 9%.How to Profit: For Abbott Laboratories (ABT), go 50% long at $38.73 and 50% long at $38.35, with a stop at $37.17 (risk of approx. 3.5%).

For Bristol Myers Squibb Co. (BMY), go 50% long at $50.88 and 50% long at $50.04, with a stop at $48.07 (risk of approx. 4.7%).

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.